Philips 2014 Annual Report Download - page 130

Group nancial statements 12.9 4
130 Annual Report 2014
assets held for sale amounted to EUR 423 million at
moment of disposal (December 31, 2013: EUR 348
million) in the Consolidated balance sheets.
Discontinued operations: Other
Certain results of other divestments including the
Television business formerly reported as discontinued
operations are included with a net gain of EUR 31 million
in 2014 (2013: a net loss of EUR 1 million; 2012: a net loss
of EUR 31 million).
Other assets classied as held for sale
On July 1, 2013, Philips announced to transfer certain
assets and cash proceeds from the sale of certain assets
to the Dutch pension plan. In total EUR 38 million of
related assets are classied as held for sale as of
December 31, 2014 (December 31, 2013: EUR 94 million).
For more details see note 20, Post-employment
benets.
Assets and liabilities directly associated with assets
held for sale relate to property, plant and equipment for
an amount of EUR 23 million (December 31, 2013: EUR
13 million) and businesses classied as held for sale
amounted to EUR 19 million at December 31, 2014
(December 31, 2013 EUR nil million).
In 2014, property, plant and equipment divested assets
classied as held for sale amounted to EUR 17 million
with proceeds of EUR 19 million. Other non-current
nancial assets divested assets classied as held for
sale amounted to EUR 76 million with proceeds of EUR
76 million. Businesses divested assets classied as held
for sale amounted to EUR 49 million and liabilities
directly associated with the assets held for sale
amounted to EUR 3 million. The businesses divested
had proceeds of EUR 45million.
4Acquisitions and divestments
2014
Acquisitions
Philips completed three acquisitions in 2014. These
acquisitions involved an aggregated purchase price of
EUR 171 million.
One of the acquisitions in 2014, was General Lighting
Company (GLC), domiciled in The Kingdom of Saudi
Arabia (KSA). This acquisition enables Philips to grow
its business in KSA, the largest economy in the Middle
East by GDP, particularly in LED lighting.
On September 2, 2014, the Company acquired 51% of
GLC from a consortium of shareholders for a total
amount of EUR 146 million (on a cash-free, debt-free
basis). Taking into account closing conditions, Philips
paid an amount of EUR 148 million. The overall cash
position of GLC on the transaction date was EUR 23
million resulting in a net cash outow related to this
acquisition of EUR 125 million. Acquisition related costs
that were recognized in General and administrative
expenses amounted to EUR 4 million.
Subsequent to the acquisition, Philips’ existing Lighting
activities in KSA were combined with GLC. This
combined entity was renamed Philips Lighting Saudi
Arabia.
Alliance Holding Ltd. is the company that holds a 49%
non-controlling interest in Philips Lighting Saudi
Arabia.
As of September 2, 2014, Philips Lighting Saudi Arabia
is consolidated as part of the Professional Lighting
Solutions business within the Lighting sector. The
condensed balance sheet of GLC, immediately before
and after the acquisition is as follows:
GLC
Balance sheet in millions of EUR
2014
before
acquisition
date
after
acquisition
date
Goodwill 58
Other intangible assets 158
Property, plant and equipment 18 18
Working capital 112 122
Provisions (15) (56)
Cash 23 23
Total assets and liabilities 138 323
Group equity 47 146
Non-controlling interests – 86
Loans 91 91
Financed by 138 323
The fair value of assets and liabilities after the
acquisition is provisional pending a nal assessment in
the course of 2015.
The goodwill is primarily related to the synergies
expected to be achieved from integrating GLC in the
Lighting sector. The goodwill is not tax deductible.
Other intangible assets are comprised of the following:
GLC
Other intangible assets in millions of EUR
2014
amount
amortization
period in years
Order backlog 17 0.2
Brand name 57 20
Customer relationships 84 10
Total other intangible assets 158
For the period from September 2, 2014, Philips Lighting
Saudi Arabia contributed sales of EUR 86 million and
loss from operations of EUR 19 million mainly due to
amortization of other intangible assets.